The Next Big Thing in Luxury - Branded Real Estate
"Branded" properties could become the norm as
demand for high standards of design, leisure and labeled property
increases among the rich in both established and emerging markets,
according to the latest report from property group Knight Frank.
Celebrities and global companies are endorsing
properties around the globe with Virgin in Moscow, Versace in Dubai and
Bulgari in London's Knights bridge just some of the high profile
companies that are engaging in "branding" properties.
Global
research conducted by the Knight Frank shows that developers can
increase profits by around a third by building "branded homes,"
fully-serviced designer luxury pads that separate them from the rest of
the real estate pack and appeal to an aspirational clientele.
"Originally,
branded residences were simply residential developments linked to an
adjacent hotel. However, the provision of hotel services is now only
part of the concept," Liam Bailey, head of Residential Research at
Knight Frank and the author of the report said.
Now, wealthy
consumers are demanding designer developments with restaurants, bars and
leisure facilities on site – and a well known, "trusted" brand name
associated with their property, especially in emerging markets such as
Russia and South America where "swathes" of new millionaires have been
created, the report says.
'Trusted Brands'
The
report states that the ncrease in the number of wealthy people — and
the rise in the value of their assets — has coincided with a shift in
their investment requirements. The group's data confirms that several
years of chaotic financial markets have convinced many in this group
that they ought to invest a greater share of their wealth portfolio in
tangible assets, including residential property.
The emerging
market partiality to "brands" and luxury goods as trusted names,
however, has added a new dimension to branded property development.
"Evidence
from the development of the luxury consumer goods market confirms the
importance placed on brands in these markets as a means of confirming
provenance, security and trust. It seems likely that as global wealth
creation expands, the demand for high quality residential development
property in key global centers will undoubtedly rise," Bailey states.
Using
globally known designers such as Philippe Starck or celebrities such as
Jade Jagger, daughter of Rolling Stones' singer Mick Jagger, developers
operating in the competitive global property marketplace view branded
residences as a way to give their developments the edge.
Yoo, a
luxury property developer cited in Knight Frank's report has branded and
designed more than 10,000 homes, hotels and commercial projects in 37
cities, working with designers such as Marcel Wanders, Jade Jagger and
Anouska Hempel.
Yoo chairman John Hitchcox said a name — and its associations with style — appeals to consumers.
"It
lends credibility, endorsement and identification, in that the buyer is
identifying with a certain lifestyle and taste. Jade Jagger isn't a
designer in the traditional sense but her bohemian lifestyle and taste
are very well recognized and there is an alignment there with people who
buy schemes that Jade has been involved with," Hitchcox notes.
What's in a Name?
Knight
Frank researched branded and non-branded property developments in 17
global cities and found that developments linked to well-known designers
or labels were around a third more valuable that similar plots nearby.
"For
each location where we were able to attain sufficient evidence, branded
developments outperform non-branded developments, sometimes by a
considerable margin."
The report found, for instance, that branded
property had an average 34 percent value above their non-branded
counterparts, although the amount of increase ranged from 5.7 percent in
Jakarta, 45 percent in Puerto Rico to as high as 120 percent in
locations such as Dubai.
Bailey and Knight Frank identified four
key reasons why branded properties are doing well, citing innovation in
the property market, high clientele services, design and "the trust
associated with buying into a known brand."
Yoo's chairman Hitchcox denied that it was just a name selling developments.
"The
essence of luxury living isn't the bells and whistles, the décor or the
eccentric public areas designs like Philippe Starck are known for. It's
the sense of place and feeling of community that people buy into," he
said in the report.
"Just as when you walk into an Apple Store you
do so with certain expectations of freedom and service, so people look
to premium homes with similarly high expectations,"
"Some areas
of the world are becoming overheated [in the property market and having
something extra to differentiate oneself from competitors is becoming
more and more vital."
by Holly Ellyatt (Assistant Producer, CNBC.com)
by Holly Ellyatt (Assistant Producer, CNBC.com)
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